Energy company merger may affect IT departments

The proposed $27 billion dollar “merger of equals” announced earlier this month between Calgary-based petroleum giants Alberta Energy Company Ltd. and PanCanadian Energy Corp. could lead to future job cuts – including IT jobs, according to one industry observer.

Once approved, the combined Calgary-based organization will operate as EnCana Corp., Canada’s biggest oil and gas producer, and among the largest in the world, the companies said.

Officials would not rule out future job cuts as a result of the merger. “We do acknowledge that that there is a good possibility of staff reduction,” said a spokesperson for PanCanadian, who added that it is too early to determine when or if job losses would occur.

AEC president and CEO Gwyn Morgan noted at a recent press conference that the proposed deal is primarily designed to fuel future growth, but added job losses are possible.

“This isn’t about job cuts, and this isn’t about getting smaller and trying to squeeze out costs in the company,” Morgan said. “Everywhere you look in the economy, there’s going to be new opportunity…we are uniting two of the best Canadian oil and gas companies with world-class people and assets.”

Neither company would go so far as to speculate on whether merging their respective IT departments would result in any employee displacement or overlap.

Generally, mergers of this magnitude are undertaken with hopes of gaining economies of scale, according to Julie Kaufman, research manager at Toronto-based IDC Canada. Kaufman noted that while the matter is still to be determined, there could certainly be an impact to both IT departments at some point in the future.

“It would depend on the systems that both companies are using,” Kaufman said. “If their systems are significantly diverse, both IT departments would have to work together to start taking those systems online and merging those systems or transferring data from one system to another,” Kaufman said.

“Their systems might be very close together, they might be using the same data networking systems that would not put a burden on them when merging the two companies,” she continued, adding that keeping in mind best practices, any impact might not initially be significant at the outset of the merger process.

PanCanadian employees around 2,000 people in offices across Canada, the U.S., the U.K. and Libya. AEC employs 1,800 people in Canada, the U.S. and Ecuador.

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